How to Calculate VAT
by Kevin
(Pretoria, South Africa)
Q: How do I calculate the VAT included in the debtor and creditor control accounts?
A: Control accounts for debtors and creditors are the full amounts including VAT (Value-Added Tax) that are owed from one party to another.
Assuming VAT is 14%, to calculate the VAT portion you take the total of debtors or creditors and multiply by 14/114.
So, for example, if our total debtors amount owing to the business is R228 (228 Rand - South African currency), then we do the following:
R228 x 14/114
= R28
The actual sales figure here - excluding VAT - could be calculated in 2 ways:
1) We could just take the total of the debtors, which includes VAT, and subtract the VAT figure we just calculated:
R228 - R28
= R200
2) Or we could take the total debtors figure and multiply this by 100/114:
R228 x 100/114
= R200
Hope that helps and that now you understand how to calculate VAT!
And see below in the comments for a few more questions I answered with examples of calculating VAT...
- Michael Celender
Accounting Basic for Students
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